Capital Expenditures (AGI)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-05-11
CLNP Page ID:	2021
Page Categories:	[AGI Applications]
Citation:	Capital Expenditures (AGI), CLNP 2021, <>, retrieved on 2024-05-11
Editor:	MKent
Last Updated:	2022/11/30

Residential Tenancies Act, 2006, S.O. 2006, c. 17

126 (1) A landlord may apply to the Board for an order permitting the rent charged to be increased by more than the guideline for any or all of the rental units in a residential complex in any or all of the following cases:

1. An extraordinary increase in the cost for municipal taxes and charges for the residential complex or any building in which the rental units are located.

2. Eligible capital expenditures incurred respecting the residential complex or one or more of the rental units in it.

3. Operating costs related to security services provided in respect of the residential complex or any building in which the rental units are located by persons not employed by the landlord. 2006, c. 17, s. 126 (1); 2017, c. 13, s. 22 (1).

(2) In this section,

“extraordinary increase” means extraordinary increase as defined by or determined in accordance with the regulations. 2006, c. 17, s. 126 (2).

...

(7) Subject to subsections (8) and (9) and except under the prescribed circumstances, a capital expenditure is an eligible capital expenditure for the purposes of this section if,

(a) it is necessary to protect or restore the physical integrity of the residential complex or part of it;

(b) it is necessary to comply with subsection 20 (1) or clauses 161 (a) to (e);

(c) it is necessary to maintain the provision of a plumbing, heating, mechanical, electrical, ventilation or air conditioning system;

(d) it provides access for persons with disabilities;

(e) it promotes energy or water conservation; or

(f) it maintains or improves the security of the residential complex or part of it. 2006, c. 17, s. 126 (7); 2017, c. 13, s. 22 (3).

(8) A capital expenditure to replace a system or thing is not an eligible capital expenditure for the purposes of this section if the system or thing that was replaced did not require major repair or replacement, unless the replacement of the system or thing promotes,

(a) access for persons with disabilities;

(b) energy or water conservation; or

(c) security of the residential complex or part of it. 2006, c. 17, s. 126 (8).

(9) A capital expenditure is not an eligible capital expenditure with respect to a rental unit for the purposes of this section if a new tenant entered into a new tenancy agreement in respect of the rental unit and the new tenancy agreement took effect after the capital expenditure was completed. 2006, c. 17, s. 126 (9).

O. Reg. 516/06: GENERAL

18. (1) In the Act and in this Part,

“capital expenditure” means an expenditure for an extraordinary or significant renovation, repair, replacement or new addition, the expected benefit of which extends for at least five years including,

(a) an expenditure with respect to a leased asset if the lease qualifies as determined under subsection (2), and

(b) an expenditure that the landlord is required to pay on work undertaken by a municipality, local board or public utility, other than work undertaken because of the landlord’s failure to do it,

but does not include,

(c) routine or ordinary work undertaken on a regular basis or undertaken to maintain a capital asset in its operating state, such as cleaning and janitorial services, elevator servicing, general building maintenance, grounds-keeping and appliance repairs, or

(d) work that is substantially cosmetic in nature or is designed to enhance the level of prestige or luxury offered by a unit or residential complex; (“dépense en immobilisations”)

“incurred” means, in relation to a capital expenditure,

(a) the payment in full of the amount of the capital expenditure, other than a holdback withheld under the Construction Lien Act,

(b) if the expenditure relates to a lease, the assumption, when the lease commences, of the obligations under it, or

(c) if the expenditure relates to work undertaken by a municipality, local board or public utility, when the work is completed; (“engager”)

“physical integrity” means the integrity of all parts of a structure, including the foundation, that support loads or that provide a weather envelope and includes, without restricting the generality of the foregoing, the integrity of,

(a) the roof, exterior walls, exterior doors and exterior windows,

(b) elements contiguous with the structure that contribute to the weather envelope of the structure, and

(c) columns, walls and floors that support loads. (“intégrité matérielle”) O. Reg. 516/06, s. 18 (1).

(2) For the purposes of the definition of “capital expenditure” in subsection (1), a lease qualifies if substantially all the risks and benefits associated with the leased asset are passed to the lessee and, when the lease commences, any one or more of the following is satisfied:

1. The lease provides that the ownership of the asset passes to the lessee at or before the end of the term of the lease.

2. The lease provides that the lessee has an option to purchase the asset at the end of the term of the lease at a price that is less than what the market value of the asset will be at that time.

3. The term of the lease is at least 75 per cent of the useful life of the asset, as determined in accordance with section 27 but without regard to any part of section 27 that prevents the useful life from being determined to be less than 10 years.

4. The net present value of the minimum lease payments is at least 90 per cent of the asset’s fair market value at the commencement of the lease where the net present value is determined using the interest rate determined under section 20. O. Reg. 516/06, s. 18 (2).

(...)

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Residential Tenancies Act, 2006

ONTARIO REGULATION 516/06

GENERAL

Consolidation Period: From November 30, 2020 to the e-Laws currency date.

Last amendment: 694/20.

This is the English version of a bilingual regulation.

CONTENTS

PART I INTERPRETATION AND EXEMPTIONS

1.

Definition of “care home”

2.

Definition of “care services”

3.

Definition of “tenant”

4.

Definition of “vital service”

5.

Prescribed programs

6.

Exemptions from certain provisions

7.

Rental unit in care home

PART II MATTERS RELATING TO RENT

8.

Reasonable enjoyment during repairs

9.

Receipt

10.

Prescribed conditions under s. 111 (2) and (2.1), par. 1 of the Act

11.

Prescribed discounts under s. 111 (2.1), par. 2 of the Act

12.

Calculation of lawful rent

13.

Higher rent charged in first rental period

14.

Exclusions from calculation of rent

15.

Material to be filed

16.

Prescribed services, facilities, etc.

17.

Exemptions from s. 134 (1) and (3) of the Act

PART III APPLICATION FOR RENT INCREASES ABOVE GUIDELINE

18.

Definitions

19.

Definitions

20.

Interest rate

21.

Factor to be applied

22.

Material to accompany application

23.

Information for tenants

24.

Determination of capital expenditures, operating costs

25.

Non-arm’s length transaction

26.

Findings related to capital expenditures

27.

Useful life of work or thing

28.

Municipal taxes and charges, extraordinary increase

28.1

Municipal taxes and charges, extraordinary increase, 2021

29.

Rules

30.

Operating costs related to security services

31.

Calculation of percentage rent increase

32.

When rent increase may be taken

33.

When rent increase may be taken

34.

Sequence — components of the increase

PART IV REDUCTIONS IN RENT — UTILITIES AND CAPITAL EXPENDITURES

35.

Utilities

36.

Rent reductions under s. 128 (3) of the Act

37.

Prescribed percentage, period

38.

Rules for prescribing a date for the purpose of s. 129 of the Act

PART V REDUCTIONS IN RENT — SERVICES AND TAXES

39.

Rules relating to reduction in services

40.

Application of ss. 24 and 25

41.

Reduction of municipal taxes

42.

Application for variance

43.

Determination by Board

44.

Information to be filed with application

45.

Reduction in municipal taxes and charges

PART VI GENERAL

46.

Hours for retrieval of property

47.

Contents of information package

48.

Care homes

49.

Interpretation

50.

Mobile homes

51.

Interpretation

PART VII BOARD — ADMINISTRATION AND POWERS

52.

Employees

53.

Information to accompany application

56.

Restriction on altering time requirements

57.

Financial matters

58.

Prescribed amount

59.

Filings in electronic format

60.

Contingency fees

PART VIII OTHER MATTERS

61.

Transition

62.

Transition, s. 9 of the Rental Fairness Act, 2017

63.

Transition, s. 12 of the Rental Fairness Act, 2017

64.

Transition, s. 18 of the Rental Fairness Act, 2017

Schedule

Useful life of work done or thing purchased

PART I INTERPRETATION AND EXEMPTIONS Definition of “care home” 1. (1) One or more rental units that form part of a residential complex are care homes for the purpose of the definition of “care home” in subsection 2 (1) of the Act if the rental units are occupied or intended to be occupied by persons for the purpose of receiving care services, whether or not receiving the care services is the primary purpose of the occupancy. O. Reg. 516/06, s. 1 (1).

(2) Subsection (1) applies even if a third party rents the rental unit from the landlord and provides or arranges to provide both the rental unit and care services to the tenant. O. Reg. 516/06, s. 1 (2).

Definition of “care services” 2. (1) As part of health care services, rehabilitative services, therapeutic services and services that provide assistance with the activities of daily living, the following are included in the definition of “care services” in subsection 2 (1) of the Act:

1. Nursing care.

2. Administration and supervision of medication prescribed by a medical doctor.

3. Assistance with feeding.

4. Bathing assistance.

5. Incontinence care.

6. Dressing assistance.

7. Assistance with personal hygiene.

8. Ambulatory assistance.

9. Personal emergency response services. O. Reg. 516/06, s. 2 (1).

(2) The following services are included in the definition of “care services” in subsection 2 (1) of the Act if they are provided along with any service set out in subsection (1):

1. Recreational or social activities.

2. Housekeeping.

3. Laundry services.

4. Assistance with transportation. O. Reg. 516/06, s. 2 (2).

Definition of “tenant” 3. (1) If a tenant of a rental unit dies and the rental unit is the principal residence of the spouse of that tenant, the spouse is included in the definition of “tenant” in subsection 2 (1) of the Act unless the spouse vacates the unit within the 30-day period described in subsection 91 (1) of the Act. O. Reg. 516/06, s. 3 (1).

(2) If a tenant vacates a rental unit without giving a notice of termination under the Act and without entering into an agreement to terminate the tenancy, and the rental unit is the principal residence of the spouse of that tenant, the spouse is included in the definition of “tenant” in subsection 2 (1) of the Act. O. Reg. 516/06, s. 3 (2).

(3) Subsection (2) does not apply if any one or more of the following criteria are satisfied:

1. The rental unit is in a building containing not more than three residential units and the landlord resides in the building.

2. The spouse vacates the rental unit no later than 60 days after the tenant vacated the rental unit.

3. The tenant who vacated the rental unit was not in arrears of rent and the spouse fails to advise the landlord, before an order is issued under section 100 of the Act, that he or she intends to remain in the rental unit.

4. The tenant who vacated the rental unit was in arrears of rent, the landlord gives the spouse a notice in a form approved by the Board within 45 days after the date the tenant vacated the unit, and the spouse fails, within 15 days after receiving the notice,

i. to advise the landlord that he or she intends to remain in the rental unit, or

ii. to agree in writing with the landlord to pay the arrears of rent.

5. The tenant who vacated the rental unit was in arrears of rent, the landlord does not give the spouse a notice referred to in paragraph 4 within 45 days after the date the tenant vacated the unit, and the spouse fails, before an order is issued under section 100 of the Act,

i. to advise the landlord that he or she intends to remain in the rental unit, or

ii. to agree in writing with the landlord to pay the arrears of rent. O. Reg. 516/06, s. 3 (3).

(4) Subsections (1) and (2) do not apply to,

(a) a rental unit described in section 7 of the Act;

(b) a rental unit that is in a care home to which Part IX of the Act applies; or

(c) a rental unit to which section 6 of this Regulation applies. O. Reg. 516/06, s. 3 (4).

Definition of “vital service” 4. (1) For the purpose of the definition of “vital service” in subsection 2 (1) of the Act, September 1 to June 15 is prescribed as the part of the year during which heat is a vital service. O. Reg. 516/06, s. 4 (1).

(2) For the purposes of subsection (1), heat shall be provided so that the room temperature at 1.5 metres above floor level and one metre from exterior walls in all habitable space and in any area intended for normal use by tenants, including recreation rooms and laundry rooms but excluding locker rooms and garages, is at least 20 degrees Celsius. O. Reg. 516/06, s. 4 (2).

(3) Subsection (2) does not apply to a rental unit in which the tenant can regulate the temperature and a minimum temperature of 20 degrees Celsius can be maintained by the primary source of heat. O. Reg. 516/06, s. 4 (3).

Prescribed programs 5. The following federal, provincial or municipal programs are prescribed for the purposes of paragraph 3 of subsection 7 (1) of the Act:

1. Non-Profit Low Rental Housing Program established under the National Housing Act (Canada).

2. Non-Profit 2% Write-Down Non-Profit Housing Program established under the National Housing Act (Canada).

3. Non-Profit Full Assistance Housing Programs administered before January 1, 2001 by the Ministry, not including the Municipal Non-Profit Housing Program, but including,

i. JobsOntario Homes,

ii. The Ontario Non-Profit Housing Program (P-3000),

iii. The Ontario Non-Profit Housing Program (P-3600),

iv. The Ontario Non-Profit Housing Program (P-10,000),

v. Homes Now, and

vi. Federal/Provincial Non-Profit Housing Program (1986-1993).

4. Municipal Non-Profit Housing Program (1978-1985).

5. Municipal Assisted Housing Program (Toronto Housing Company).

6. Urban Native Fully Targeted Housing Program established under the National Housing Act (Canada).

7. Urban Native 2% Write-Down and Additional Assistance Program established under the National Housing Act (Canada). O. Reg. 516/06, s. 5.

Exemptions from certain provisions 6. (1) Section 8, paragraphs 6, 7 and 8 of subsection 30 (1), sections 51, 52, 54, 55, 56 and 95 to 99, subsection 100 (2) and sections 101, 102, 104, 111 to 115, 117, 120, 121, 122, 126 to 133, 140, 143, 149, 150, 151, 159, 165 and 167 of the Act do not apply to rental units that meet the criteria set out in subsection (2) and that were developed or acquired under the following initiatives:

1. Canada-Ontario Affordable Housing Program — Rental and Supportive Housing.

2. Canada-Ontario Affordable Housing Program — Northern Housing.

3. Residential Rehabilitation Assistance Program.

4. Supporting Communities Partnership Initiative.

5. Municipal capital facility by-laws for housing or other council-approved municipal housing programs. O. Reg. 516/06, s. 6 (1).

(2) Subsection (1) applies to a rental unit described in that subsection if,

(a) the unit is subject to an agreement related to the provision of housing services between the landlord and one or more of,

(i) a municipality,

(ii) an agency of a municipality,

(iii) a non-profit corporation controlled by a municipality, if an object of the non-profit corporation is the provision of housing,

(iv) a local housing corporation as defined in the Housing Services Act, 2011, or

(v) a service manager as defined in the Housing Services Act, 2011;

(b) the unit is identified as a subsidized unit that was developed or acquired under an initiative listed in subsection (1), and as being subject to an agreement described in clause (a), in,

(i) the tenancy agreement, or

(ii) a written notice that was given by the landlord to the tenant, if the tenancy agreement was entered into before January 31, 2007; and

(c) the tenant, at the time the tenancy agreement was entered into, was on or was eligible to be on a social housing waiting list. O. Reg. 516/06, s. 6 (2); O. Reg. 377/11, s. 1.

(3) Section 8, paragraphs 6, 7 and 8 of subsection 30 (1), sections 51, 52, 54, 55, 56 and 95 to 99, subsection 100 (2) and sections 101, 102, 104, 111 to 115, 117, 120, 121, 122, 126 to 133, 140, 143, 149, 150, 151, 159, 165 and 167 of the Act do not apply to rental units that were developed or acquired, and that continue to operate, under the Rural and Native Rental Housing Program established under the National Housing Act (Canada). O. Reg. 516/06, s. 6 (3).

(4) Section 119 of the Act does not apply to a rental unit that is exempt under subsection (1) or (3) if the tenant occupying the unit pays rent in an amount geared-to-income due to public funding. O. Reg. 516/06, s. 6 (4).

(5) Sections 116 and 118 of the Act do not apply to increases in rent for a rental unit due to increases in the tenant’s income if the rental unit is exempt under subsection (1) or (3) and the tenant pays rent in an amount geared-to-income due to public funding. O. Reg. 516/06, s. 6 (5).

(6) Paragraph 2 of subsection 58 (1) and subsection 60 (1) of the Act apply to a rental unit described in subsection (1) or (3) of this section, even though the rental unit is not a rental unit described in paragraph 1, 2, 3 or 4 of subsection 7 (1) of the Act. O. Reg. 516/06, s. 6 (6).

Rental unit in care home 7. (1) Subsections 37 (4) and (5) of the Act do not apply to a rental unit in a care home if,

(a) the rental unit is occupied for the purpose of receiving rehabilitative or therapeutic services agreed upon by the tenant and the landlord;

(b) the period of occupancy agreed to by the tenant and the landlord is no more than four years;

(c) the tenancy agreement stipulates that the tenancy may be terminated and the tenant evicted when the objectives of the services have been met or will not be met; and

(d) the unit is subject to an agreement for the provision of housing services between the landlord and a service manager as defined in the Housing Services Act, 2011. O. Reg. 516/06, s. 7 (1); O. Reg. 377/11, s. 2.

(2) If a landlord makes an application under subsection 77 (1) of the Act and the application is based on a notice or agreement to which, pursuant to subsection (1), subsections 37 (4) and (5) of the Act do not apply, the expression “the termination date specified in the agreement or notice” in subsection 77 (3) of the Act means the earlier of the following dates:

1. The last day of the period of occupancy referred to in clause (1) (b).

2. The day that is 60 days after the day the tenant received notice from the landlord that the objectives of the services have been met or will not be met. O. Reg. 516/06, s. 7 (2).

(3) For greater certainty, for the purposes of clause (1) (c) and subsection (2), the objectives of the services will not be met if the tenant has repeatedly and substantially withdrawn from participation in the services. O. Reg. 516/06, s. 7 (3).

PART II MATTERS RELATING TO RENT Reasonable enjoyment during repairs Definition 8. (1) In this section,

“work” means maintenance, repairs or capital improvements carried out in a rental unit or a residential complex. O. Reg. 516/06, s. 8 (1).

(2) For the purposes of section 22, paragraph 3 of subsection 29 (1) and subsection 31 (1) of the Act, this section applies to the Board in making a determination,

(a) as to whether a landlord, superintendent or agent of a landlord, in carrying out work in a rental unit or residential complex, substantially interfered with the reasonable enjoyment of the unit or complex for all usual purposes by a tenant or former tenant, or by a member of the household of a tenant or former tenant; and

(b) whether an abatement of rent is justified in the circumstances. O. Reg. 516/06, s. 8 (2).

(3) In making a determination described in subsection (2),

(a) the Board shall consider the effect of the carrying out of the work on the use of the rental unit or residential complex by the tenant or former tenant, and by members of the household of the tenant or former tenant; and

(b) the Board shall not determine that an interference was substantial unless the carrying out of the work constituted an interference that was unreasonable in the circumstances with the use and enjoyment of the rental unit or residential complex by the tenant or former tenant, or by a member of the household of the tenant or former tenant. O. Reg. 516/06, s. 8 (3).

(4) If the Board finds that the landlord, superintendent or agent of the landlord, in carrying out work in a rental unit or residential complex, substantially interfered with the reasonable enjoyment of the unit or complex for all usual purposes by a tenant or former tenant, or by a member of the household of a tenant or former tenant, the Board shall not order an abatement of rent if all of the following conditions are satisfied:

1. The landlord gave notice to the tenant or former tenant at least 60 days before the commencement of the work, or, in cases of emergency, as soon as was reasonable in the circumstances, concerning the work to be carried out.

2. The landlord gave notice to any prospective tenant of a rental unit at the first opportunity to do so before the landlord entered into a new tenancy agreement with that tenant.

3. The notice describes the nature of the work to be carried out, the expected impact on tenants and members of their households and the length of time the work is expected to take.

4. The notice was reasonably accurate and comprehensive in the circumstances at the time it was given.

5. If there was a significant change in the information provided under paragraph 3, the landlord provided to the tenant or former tenant an update to the notice in a timely manner.

6. The work,

i. is necessary to protect or restore the physical integrity of the residential complex or part of it,

ii. is necessary to comply with maintenance, health, safety or other housing related standards required by law,

iii. is necessary to maintain a plumbing, heating, mechanical, electrical, ventilation or air conditioning system,

iv. provides access for persons with disabilities,

v. promotes energy or water conservation, or

vi. maintains or improves the security of the residential complex.

7. If required under the Building Code Act, 1992, a permit was issued in respect of the work.

8. The work was carried out at reasonable times, or if a municipal noise control by-law was in effect, during the times permitted under the noise control by-law.

9. The duration of the work was reasonable in the circumstances.

10. The landlord took reasonable steps to minimize any interference resulting from noise associated with the work. O. Reg. 516/06, s. 8 (4).

(5) If the Board finds that the landlord, superintendent or agent of the landlord, in carrying out work in a rental unit or residential complex, substantially interfered with the reasonable enjoyment of the unit or complex for all usual purposes by a tenant or former tenant, or by a member of the household of a tenant or former tenant, and an abatement of rent is not prohibited under subsection (4), the Board shall consider the following in determining whether it is appropriate to order an abatement of rent and the amount of the abatement:

1. The nature, duration and degree of interference with the reasonable enjoyment of the rental unit or residential complex that was caused by the carrying out of the work.

2. Whether the tenant or former tenant is responsible for any undue delay in the carrying out of the work.

3. The steps taken by the landlord during the work to minimize interference with the reasonable enjoyment of the rental unit or residential complex.

4. Whether the tenant or former tenant took advantage of any service provided by the landlord or arrangement made by the landlord that would minimize interference with the reasonable enjoyment of the rental unit or residential complex.

5. Whether a failure to carry out the work could, within a reasonable period of time, reasonably be expected to result in,

i. interference with the reasonable enjoyment of the rental unit or residential complex for all usual purposes by a tenant or member of his or her household,

ii. a reduction or discontinuation of a service or facility,

iii. damage or additional damage to the rental unit, the residential complex or anything in the unit or complex,

iv. a risk to any person’s health or personal safety, or

v. a breach of section 20 or section 161 of the Act by the landlord. O. Reg. 516/06, s. 8 (5).

(6) Except as permitted under subsection (7), no abatement of rent shall exceed 25 per cent of the monthly rent for each month or part of a month during which there was substantial interference with the reasonable enjoyment of the rental unit or residential complex for all usual purposes by the tenant or former tenant, or by a member of the household of the tenant or former tenant. O. Reg. 516/06, s. 8 (6).

(7) The Board may order an abatement of rent that exceeds 25 per cent of the monthly rent for a rental unit if,

(a) the Board considers a larger abatement to be warranted in the circumstances because the interference with the reasonable enjoyment of the rental unit or residential complex far exceeded the level that would normally be expected, taking into consideration all of the relevant circumstances; and

(b) the Board is satisfied that,

(i) the work is not work described in paragraph 6 of subsection (4),

(ii) the work was carried out at unreasonable times or at a time that is not permitted under any applicable noise control by-law,

(iii) the work was carried out in a manner that contravened a condition or requirement of a building permit issued under the Building Code Act, 1992,

(iv) the work was carried out over a period of time far in excess of the amount of time that normally would be required, after taking into consideration any exceptional circumstances beyond the control of the landlord, including weather-related delays, delays in obtaining necessary government approvals or permits and delays caused by market shortages of suitable goods or services or qualified labour at reasonable costs, or

(v) the landlord refused to take reasonable steps during the work to minimize interference with the reasonable enjoyment of the rental unit or residential complex for all usual purposes by the tenant or former tenant, or by a member of the household of the tenant or former tenant. O. Reg. 516/06, s. 8 (7).

(8) The Board shall not order an abatement of rent that exceeds 100 per cent of the monthly rent for each month or part of a month during which the Board determines that the work substantially interfered with the reasonable enjoyment of the rental unit or residential complex for all usual purposes by the tenant or former tenant, or by a member of the household of the tenant or former tenant. O. Reg. 516/06, s. 8 (8).

Receipt 9. A document constitutes a receipt for the purposes of section 109 of the Act if it includes, at a minimum,

(a) the address of the rental unit to which the receipt applies;

(b) the name of the tenants to whom the receipt applies;

(c) the amount and date for each payment received for any rent, rent deposit, arrears of rent, or any other amount paid to the landlord and shall specify what the payment was for;

(d) the name of the landlord of the rental unit; and

(e) the signature of the landlord or the landlord’s authorized agent. O. Reg. 516/06, s. 9.

Prescribed conditions under s. 111 (2) and (2.1), par. 1 of the Act 10. (0.1) The only condition prescribed for the purpose of subsection 111 (2) of the Act is that the discount must be provided for in a written or oral agreement. O. Reg. 256/10, s. 1 (1).

(1) The following conditions are prescribed for the purpose of paragraph 1 of subsection 111 (2.1) of the Act:

1. The discount must be provided for in a written agreement.

2. If the rent is paid monthly and the discount is equal to the rent for one month or less, the entire discount must be taken during one rental period.

3. If the rent is paid monthly and the discount is equal to the rent for a period greater than one month but not more than two months, the discount equal to the rent for one month must be taken during one rental period and the balance within one other rental period.

4. If the rent is paid monthly and the discount is equal to the rent for a period greater than two months but not more than three months, the discount equal to the rent for two months must be taken for two rental periods and the balance within one other rental period.

5. If the rent is paid daily or weekly, the discount must be taken in periods that are at least one week in duration. O. Reg. 516/06, s. 10 (1); O. Reg. 256/10, s. 1 (2).

(2) Revoked: O. Reg. 256/10, s. 1 (3).

Prescribed discounts under s. 111 (2.1), par. 2 of the Act 11. (1) The following discounts are prescribed for the purposes of paragraph 2 of subsection 111 (2.1) of the Act:

1. A discount provided for in a written agreement, if the total amount of the discount that is provided during the first eight months of the 12-month period does not exceed the rent for one month.

2. A discount provided for in a written agreement, if,

i. the total amount of the discount that is provided in the 12-month period does not exceed the rent for two months,

ii. the total amount of the discount that is provided in the first seven months of the 12-month period does not exceed the rent for one month, and

iii. any discount that is provided in the last five months of the 12-month period is provided in only one of those months and does not exceed the rent for one month.

3. A discount provided under a tenancy agreement that operates under the Strong Communities Housing Allowance Program — Toronto Pilot, if the landlord sets out the discounted rent and the undiscounted rent in the written tenancy agreement and in a written notice to the tenant accompanying any notice of rent increase given to the tenant under section 116 of the Act. O. Reg. 516/06, s. 11 (1); O. Reg. 256/10, s. 2.

(2) In this section,

“the 12-month period” means,

(a) the 12-month period following the commencement of the tenancy,

(b) the 12-month period following any rent increase taken after the 12-month period described in clause (a), other than a rent increase taken under section 123 of the Act, or

(c) where clauses (a) and (b) do not apply, the 12-month period following the most recent anniversary of a rent increase taken in accordance with section 116 of the Act or, where no rent increase has been taken in accordance with section 116 of the Act, the commencement of the tenancy. O. Reg. 516/06, s. 11 (2).

Calculation of lawful rent 12. (1) The rules set out in this section apply in calculating lawful rent under subsection 111 (3) of the Act. O. Reg. 516/06, s. 12 (1).

(2) The lawful rent for any rental period in the 12-month period shall be calculated in the following manner:

1. Add the sum of the rents that are actually charged or to be charged in each of the rental periods in the 12-month period to the largest eligible discount determined under subsection (6).

2. Divide the amount determined under paragraph 1 by the number of rental periods in the 12-month period.

3. Add to the amount determined under paragraph 2 any rent increases under section 123 of the Act and subtract from that amount any rent decreases under section 125 of the Act. O. Reg. 516/06, s. 12 (2).

(3) Despite subsection (2), if a landlord provides a discount in rent that is greater than 2 per cent of the rent that could otherwise be lawfully charged for a rental period for paying rent on or before the date it is due, the lawful rent shall be calculated by dividing the discounted rent by 0.98. O. Reg. 516/06, s. 12 (3); O. Reg. 377/11, s. 3 (1).

(4) Despite subsections (2) and (3), if the landlord provides a discount in rent described in subsection 111 (2) of the Act and another discount, other than a discount described in subsection 111 (2.1) of the Act, the lawful rent for any rental period in the 12-month period shall be calculated in the following manner:

1. Add the sum of the rents that are actually charged or to be charged in each of the rental periods in the 12-month period to the sum of the discounts described in subsection 111 (2) of the Act actually provided or to be provided to the tenant during the 12-month period.

2. Add the amount determined under paragraph 1 to the largest eligible discount determined under subsection (6).

3. Divide the amount determined under paragraph 2 by the number of rental periods in the 12-month period.

4. Add to the amount determined under paragraph 3 any rent increases under section 123 of the Act and subtract from that amount any rent decreases under section 125 of the Act. O. Reg. 516/06, s. 12 (4); O. Reg. 256/10, s. 3 (1, 2).

(5) Despite subsections (2) and (3), if the landlord provides a discount in rent that is greater than 2 per cent of the rent that could otherwise be lawfully charged for a rental period for paying rent on or before the date it is due, and the landlord also provides another discount in rent, other than a discount described in subsection 111 (2.1) of the Act, the lawful rent for any rental period in the 12-month period shall be calculated in the following manner:

1. Divide the discounted rent by 0.98.

2. Multiply the amount determined under paragraph 1 by the number of rental periods in the 12-month period and add the result to the largest eligible discount determined under subsection (6).

3. Divide the amount determined under paragraph 2 by the number of rental periods in the 12-month period.

4. Add to the amount determined under paragraph 3 any rent increases under section 123 of the Act and subtract from that amount any rent decreases under section 125 of the Act. O. Reg. 516/06, s. 12 (5); O. Reg. 256/10, s. 3 (3).

(6) For the purpose of this section, the largest eligible discount shall be determined in accordance with the following rules:

1. In the case of a discount that is provided for in a written agreement, the largest eligible discount is the largest of the following amounts:

i. The lesser of the following amounts:

A. The sum of the discounts in rent during the first eight months of the 12-month period.

B. The rent for one month.

ii. The largest discount in rent during any month in the last five months of the 12-month period, plus the lesser of the following amounts:

A. The sum of the discounts in rent during the first seven months of the 12-month period.

B. The rent for one month.

iii. The largest discount in rent during any month in the 12-month period, if,

A. the rent is paid monthly, and

B. the largest discount in rent during any month in the 12-month period is equal to the rent for less than one month.

iv. The sum of the largest discount in rent during any month in the 12-month period and the second-largest discount in rent during any month in the 12-month period, if,

A. the rent is paid monthly,

B. the largest discount in rent during any month in the 12-month period is equal to the rent for one month, and

C. the second-largest discount in rent during any month in the 12-month period is equal to the rent for less than one month.

v. The sum of the largest discount in rent during any month in the 12-month period, the second-largest discount in rent during any month in the 12-month period, and the third-largest discount in rent during any month in the 12-month period, if,

A. the rent is paid monthly,

B. the largest discount in rent during any month in the 12-month period and the second-largest discount in rent during any month in the 12-month period are both equal to the rent for one month, and

C. the third-largest discount in rent during any month in the 12-month period is equal to the rent for less than one month.

vi. The rent for three months, if,

A. the rent is paid monthly, and

B. the largest discount in rent during any month in the 12-month period, the second-largest discount in rent during any month in the 12-month period, and the third-largest discount in rent during any month in the 12-month period are all equal to the rent for one month.

vii. The lesser of the following amounts, if the rent is paid daily or weekly:

A. The sum of the discounts in rent provided in the form of rent-free weeks during the 12-month period.

B. The rent for 13 weeks.

2. In the case of a discount that is not provided for in a written agreement, the largest eligible discount is the largest discount in rent in one rental period in the 12-month period. O. Reg. 516/06, s. 12 (6); O. Reg. 377/11, s. 3 (2).

(7) Despite subsection (2), if a tenancy agreement operates under the Strong Communities Housing Allowance Program — Toronto Pilot, and the landlord does not comply with paragraph 3 of subsection 11 (1), the lawful rent shall be the undiscounted rent that was permitted under the Act at the time when the tenancy agreement began to operate under the Program. O. Reg. 516/06, s. 12 (7).

(8) In this section,

“the 12-month period” has the same meaning as in section 11. O. Reg. 516/06, s. 12 (8).

Higher rent charged in first rental period 13. If the rent a landlord charges for the first rental period of a tenancy is greater than the rent the landlord charges for subsequent rental periods in the 12-month period beginning on the day the tenancy commenced, the lawful rent for each rental period in that 12-month period shall be calculated in the following manner:

1. Add all the rents actually charged or to be charged by the landlord during the 12-month period.

2. Subtract from that sum the rent for the first rental period.

3. Divide the amount determined under paragraph 2 by a number equal to the number of rental periods in the 12-month period minus 1. O. Reg. 516/06, s. 13.

Exclusions from calculation of rent 14. For the purpose of calculating lawful rent under sections 12 and 13, the rent actually charged or to be charged does not include,

(a) amounts which cannot be lawfully charged for a reason other than the operation of section 12 or 13;

(b) rent increases under section 123 of the Act during the 12-month period defined in subsection 11 (2) of this Regulation; or

(c) rent decreases under section 125 of the Act during the 12-month period defined in subsection 11 (2) of this Regulation. O. Reg. 516/06, s. 14.

Material to be filed 15. If an application is made by a new tenant under subsection 115 (1) of the Act, the landlord shall file with the Board, at or before the hearing, an affidavit sworn by the landlord setting out the last lawful rent charged to the former tenant and any available evidence in support of the affidavit. O. Reg. 516/06, s. 15.

Prescribed services, facilities, etc. 16. (1) The following services, facilities, privileges, accommodations or things are prescribed for the purposes of subsection 123 (1) and section 125 of the Act:

1. Cable television.

2. Satellite television.

3. An air conditioner.

4. Extra electricity for an air conditioner.

5. Extra electricity for a washer or dryer in the rental unit.

6. Blockheater plug-ins.

7. Lockers or other storage space.

8. Heat.

9. Electricity.

10. Water or sewage services, excluding capital work.

11. Floor space.

12. Property taxes with respect to a site for a mobile home or a land lease home. O. Reg. 516/06, s. 16 (1).

(1.1) In a circumstance in which clause 137 (3) (c) or 138 (1) (b) of the Act requires a landlord to reduce the rent for a rental unit, the rent reduction rules that are prescribed for the purposes of clause 137 (3) (c) or 138 (1) (b) of the Act apply instead of the requirements set out in subsections (2) to (5). O. Reg. 395/10, s. 1.

(2) If there is an agreement under subsection 123 (1) or section 125 of the Act, the maximum increase in rent or minimum decrease in rent shall be the actual cost to the landlord of the service, facility, privilege, accommodation or thing, other than floor space, that is the subject of the agreement or, where the actual cost to the landlord cannot be established or where there is no cost to the landlord, a reasonable amount based on the value of the service, facility, privilege, accommodation or thing. O. Reg. 516/06, s. 16 (2).

(3) If the agreement under subsection 123 (1) or section 125 of the Act is to provide or cease to provide floor space, the maximum increase in rent or minimum decrease in rent shall be proportionate to the change in floor space. O. Reg. 516/06, s. 16 (3).

(4) If an amount determined in accordance with subsection (3) would be unreasonable given the nature and quality of the floor space added or taken away, the maximum increase in rent or minimum decrease in rent shall be a reasonable amount based on the nature and quality of the floor space and the amount of the change in the floor space. O. Reg. 516/06, s. 16 (4).

(5) Despite subsections (2), (3) and (4), where a service, facility, privilege, accommodation or thing was provided in accordance with a previous agreement under section 123 of the Act, section 132 of the Tenant Protection Act, 1997, section 46 of the Rent Control Act, 1992 or subsection 96 (4) of the Residential Rent Regulation Act, the minimum decrease in rent on ceasing to provide the service, facility, privilege, accommodation or thing shall be equal to,

(a) the most recent amount of the separate charge for the service, facility, privilege, accommodation or thing; or

(b) where there is no separate charge, the increase in rent which the landlord took when the service, facility, privilege, accommodation or thing was first provided, adjusted by the percentage increase in the rent being charged for the rental unit from the date the service, facility, privilege, accommodation or thing was first provided to the date the landlord ceased to provide it. O. Reg. 516/06, s. 16 (5).

Exemptions from s. 134 (1) and (3) of the Act 17. The following payments are exempt from subsections 134 (1) and (3) of the Act:

1. Payment for additional keys, remote entry devices or cards requested by the tenant, not greater than the direct costs.

2. Payment for replacement keys, remote entry devices or cards, not greater than the direct replacement costs, unless the replacement keys, remote entry devices or cards are required because the landlord, on the landlord’s initiative, changed the locks.

3. Payment of a refundable key, remote entry device or card deposit, not greater than the expected direct replacement costs.

4. Payment of NSF charges charged by a financial institution to the landlord.

5. Payment of an administration charge, not greater than $20, for an NSF cheque.

6. Payment by a tenant, former tenant, subtenant or former subtenant in settlement of a court action or potential court action or an application or potential application to the Board.

7. Payment to a landlord or tenant of a mobile home park or land lease community at the commencement of a tenancy as consideration for the rental of a particular site.

8. Payment of a charge not exceeding $250 for transferring, at the request of the tenant,

i. between rental units to which subsection 6 (1) or (3) of this Regulation applies, if the rental units are located in the same residential complex, or

ii. between rental units in a residential complex that is described in paragraph 1, 2, 3 or 4 of subsection 7 (1) of the Act.

9. Payment of an amount to reimburse the landlord for property taxes paid by the landlord with respect to a mobile home or a land lease home owned by the tenant. O. Reg. 516/06, s. 17; O. Reg. 562/17, s. 1.

PART III APPLICATION FOR RENT INCREASES ABOVE GUIDELINE Definitions 18. (1) In the Act and in this Part,

“capital expenditure” means an expenditure for an extraordinary or significant renovation, repair, replacement or new addition, the expected benefit of which extends for at least five years including,

(a) an expenditure with respect to a leased asset if the lease qualifies as determined under subsection (2), and

(b) an expenditure that the landlord is required to pay on work undertaken by a municipality, local board or public utility, other than work undertaken because of the landlord’s failure to do it,

but does not include,

(c) routine or ordinary work undertaken on a regular basis or undertaken to maintain a capital asset in its operating state, such as cleaning and janitorial services, elevator servicing, general building maintenance, grounds-keeping and appliance repairs, or

(d) work that is substantially cosmetic in nature or is designed to enhance the level of prestige or luxury offered by a unit or residential complex; (“dépense en immobilisations”)

“incurred” means, in relation to a capital expenditure,

(a) the payment in full of the amount of the capital expenditure, other than a holdback withheld under the Construction Lien Act,

(b) if the expenditure relates to a lease, the assumption, when the lease commences, of the obligations under it, or

(c) if the expenditure relates to work undertaken by a municipality, local board or public utility, when the work is completed; (“engager”)

“physical integrity” means the integrity of all parts of a structure, including the foundation, that support loads or that provide a weather envelope and includes, without restricting the generality of the foregoing, the integrity of,

(a) the roof, exterior walls, exterior doors and exterior windows,

(b) elements contiguous with the structure that contribute to the weather envelope of the structure, and

(c) columns, walls and floors that support loads. (“intégrité matérielle”) O. Reg. 516/06, s. 18 (1).

(2) For the purposes of the definition of “capital expenditure” in subsection (1), a lease qualifies if substantially all the risks and benefits associated with the leased asset are passed to the lessee and, when the lease commences, any one or more of the following is satisfied:

1. The lease provides that the ownership of the asset passes to the lessee at or before the end of the term of the lease.

2. The lease provides that the lessee has an option to purchase the asset at the end of the term of the lease at a price that is less than what the market value of the asset will be at that time.

3. The term of the lease is at least 75 per cent of the useful life of the asset, as determined in accordance with section 27 but without regard to any part of section 27 that prevents the useful life from being determined to be less than 10 years.

4. The net present value of the minimum lease payments is at least 90 per cent of the asset’s fair market value at the commencement of the lease where the net present value is determined using the interest rate determined under section 20. O. Reg. 516/06, s. 18 (2).

Definitions 19. (1) In this Part,

“base year” means,

(a) when determining rent increases due to an extraordinary increase in the cost for municipal taxes and charges, the last completed calendar year immediately preceding the day that is 90 days before the effective date of the first intended rent increase referred to in the application,

(b) when determining rent increases due to operating costs related to security services, the annual accounting period of one year in length chosen by the landlord which is most recently completed on or before the day that is 90 days before the effective date of the first intended rent increase referred to in the application; (“année de base”)

“local board” means a “local board” as defined in the Municipal Affairs Act; (“conseil local”)

“reference year” means the 12-month period immediately preceding the base year. (“année de reference”) O. Reg. 516/06, s. 19 (1); O. Reg. 562/17, s. 2 (1).

(2) Despite clause (b) of the definition of “base year” in subsection (1), if an order has previously been issued with respect to the residential complex under section 126 of the Act in which relief was granted or for operating costs related to security services, the base year shall begin and end on the same days of the year as the base year used in the previous order. O. Reg. 516/06, s. 19 (2); O. Reg. 562/17, s. 2 (2).

Interest rate 20. The interest rate for the purposes of subsection 18 (2) and subsection 26 (6) is the chartered bank administered conventional five-year mortgage interest rate on the last Wednesday of the month before the month in which the application is made, as reported by the Bank of Canada. O. Reg. 516/06, s. 20.

Factor to be applied 21. (1) The factor to be applied for the purposes of paragraph 6 of subsection 29 (2) and paragraph 2 of subsection 30 (2) is determined by dividing the total rents of the rental units in the residential complex that are subject to the application and are affected by the operating cost by the total rents of the rental units in the residential complex that are affected by the operating cost. O. Reg. 516/06, s. 21 (1); O. Reg. 562/17, s. 3.

(2) For the purpose of subsection (1), the rent for a rental unit that is vacant or that is otherwise not rented shall be deemed to be the average rent charged for the rental units in the residential complex. O. Reg. 516/06, s. 21 (2).

Material to accompany application 22. (1) An application under section 126 of the Act must be accompanied by the following material:

1. If the application is based on an extraordinary increase in the cost for municipal taxes and charges,

i. evidence of the costs for the base year and the reference year and evidence of payment of those costs, and

ii. evidence of all grants, other forms of financial assistance, rebates and refunds received by the landlord that effectively reduce those costs for the base year or the reference year.

2. If the application is based on capital expenditures incurred,

i. evidence of all costs and payments for the amounts claimed for capital work, including any information regarding grants and assistance from any level of government and insurance, resale, salvage and trade-in proceeds,

ii. details about each invoice and payment for each capital expenditure item, in the form approved by the Board, and

iii. details about the rents for all rental units in the residential complex that are affected by any of the capital expenditures, in the form approved by the Board.

3. If the application is based on operating costs related to security services, evidence of the costs claimed in the application for the base year and the reference year and evidence of payment of those costs. O. Reg. 516/06, s. 22 (1); O. Reg. 562/17, s. 4.

(2) Despite subsection (1), if any of the following material is unavailable at the time the application is made under section 126 of the Act but becomes available before the end of the hearing, the material must be provided to the Board before or during the hearing:

1. Evidence described in subparagraph 1 ii of subsection (1).

2. Information concerning grants and assistance referred to in paragraph 2 of subsection (1).

3. Information concerning insurance, resale, salvage and trade-in proceeds referred to in paragraph 2 of subsection (1). O. Reg. 516/06, s. 22 (2).

(3) An application under section 126 of the Act must be accompanied by one additional photocopy of the application, by one additional photocopy of the material that accompanies the application under subsection (1), and by an electronic copy of the material that accompanies the application under subsection (1) in portable document format. O. Reg. 516/06, s. 22 (3); O. Reg. 37/20, s. 1 (1).

(4) If material is provided to the Board under subsection (2), it must be accompanied by one additional photocopy of the material and by an updated electronic copy of the material that accompanied the application under subsection (1) and the material provided under subsection (2) in portable document format. O. Reg. 516/06, s. 22 (4); O. Reg. 37/20, s. 1 (2).

(5) Revoked: O. Reg. 37/20, s. 1 (3).

(6) Subsections (3) and (4) do not apply if the application referred to in subsection (1) is not based on capital expenditures. O. Reg. 516/06, s. 22 (6); O. Reg. 37/20, s. 1 (4).

Information for tenants 23. (1) The rules set out in this section apply for the purposes of subsection 126 (4) of the Act. O. Reg. 516/06, s. 23 (1).

(2) Upon the request of a tenant subject to the application, the landlord shall provide the tenant with an electronic copy of the material provided to the Board under subsections 22 (1) and (2) in portable document format, at no charge to the tenant. O. Reg. 516/06, s. 23 (2); O. Reg. 37/20, s. 2 (1).

(3) Instead of providing the electronic copy referred to in subsection (2), the landlord and the tenant may agree that the landlord will provide the tenant with a photocopy of the material provided under subsections 22 (1) and (2), for no more than the landlord’s reasonable out-of-pocket costs for the photocopying. O. Reg. 37/20, s. 2 (2).

(4) Revoked: O. Reg. 37/20, s. 2 (2).

(5) If the landlord has an office in or close to the residential complex, the landlord shall, during normal business hours and at no charge, make a photocopy of the material provided under subsections 22 (1) and (2) available for viewing by tenants subject to the application. O. Reg. 516/06, s. 23 (5).

(6) The landlord shall, in the application, inform every tenant subject to the application of the ways in which a tenant may obtain access under this section to the material provided under subsections 22 (1) and (2). O. Reg. 516/06, s. 23 (6).

Determination of capital expenditures, operating costs 24. (1) In determining the amount of any capital expenditures or the amount of operating costs in an application under section 126 of the Act, the Board shall,

(a) include, for an application filed on or after July 1, 2010, any provincial sales tax and harmonized sales tax paid by the landlord in respect of the capital expenditures or operating costs;

(a.1) Revoked: O. Reg. 562/17, s. 5 (2).

(b) exclude any penalties, interest or other similar charges for late payment of any amount paid by the landlord in respect of the capital expenditures or operating costs;

(c) exclude any amount that has already been included in calculating the amount of a capital expenditure or operating cost in the same application or for which the landlord has obtained relief in a previous order under the Act or under the Tenant Protection Act, 1997; and

(d) subtract the amount of all grants, other forms of financial assistance, rebates and refunds received by the landlord that effectively reduce the operating costs. O. Reg. 516/06, s. 24 (1); O. Reg. 256/10, s. 4 (1); O. Reg. 122/17, s. 1 (1); O. Reg. 562/17, s. 5.

(1.1) In determining the amount of any capital expenditures or the amount of operating costs in an application under section 126 of the Act that is filed before July 1, 2010, the Board shall include the goods and services tax and provincial sales tax paid by the landlord in respect of the capital expenditures or operating costs. O. Reg. 256/10, s. 4 (2).

(1.2) Revoked: O. Reg. 562/17, s. 5 (3).

(2) If a residential complex forms part of a larger project, the operating costs for the project and the amount of capital expenditures which benefit both the residential complex and the other parts of the project shall be allocated between the residential complex and the other parts of the project in accordance with one or more of the following factors:

1. The area of each part of the project.

2. The market value of each part of the project.

3. The revenue generated by each part of the project. O. Reg. 516/06, s. 24 (2).

(3) If the allocation of operating costs and capital expenditures in accordance with subsection (2) would be unreasonable considering how much of the costs and expenditures are attributable to each part of the project, the operating costs and capital expenditures shall be allocated among the parts of the project in reasonable proportions according to how much of the costs and expenditures are attributable to each part of the project. O. Reg. 516/06, s. 24 (3).

(4) In this section,

“harmonized sales tax” means any tax imposed under Part IX of the Excise Tax Act (Canada). (“taxe de vente harmonisée”) O. Reg. 256/10, s. 4 (2); O. Reg. 122/17, s. 1 (3); O. Reg. 562/17, s. 5 (4).

Non-arm’s length transaction 25. (1) If the landlord incurs a cost arising out of a transaction that is not an arm’s length transaction, the Board shall consider only that part of the landlord’s cost that is less than or equal to the costs that would arise from a similar market transaction. O. Reg. 516/06, s. 25 (1).

(2) In this section,

“arm’s length” means the persons involved are not related persons; (“sans lien de dépendance”)

“control” means direct or indirect ownership or control either alone or with a related person of,

(a) more than 50 per cent of the issued share capital of a corporation having full voting rights under all circumstances, or

(b) issued and outstanding share capital of a corporation in an amount that permits or may permit the person to direct the management and policies of the corporation; (“contrôle”)

“family”, in relation to a person, means,

(a) the person’s spouse,

(b) the parents or other ancestors or the children or other descendants of the person or the person’s spouse,

(c) the brothers and sisters of the person or the person’s spouse, and the children and other descendants of those brothers and sisters,

(d) the aunts and uncles of the person and the person’s spouse and the children and other descendants of those aunts and uncles,

(e) the spouses of the person’s sons and daughters; (“famille”)

“related person”, where used to indicate a relationship with any person, includes,

(a) a member of the family of such person,

(b) an employer or employee of such person,

(c) a partner of such person,

(d) a trust or estate in which such person has a beneficial interest,

(e) a trust or estate in which such person serves as a trustee or in a similar capacity,

(f) a trust or estate in which persons related to such person, as otherwise determined under this definition, have a beneficial interest,

(g) a corporation controlled by such person,

(h) a corporation controlled by such person and persons related to such person, or

(i) a corporation controlled by a person related to such person; (“personne liée”)

“similar market transaction” means an arm’s length transaction that occurs or may reasonably be expected to occur under the same or comparable terms and conditions and in the same general geographic location. (“opération semblable sur le marché”) O. Reg. 516/06, s. 25 (2).

(3) In this section, one corporation is related to another corporation if,

(a) one of the corporations is controlled by the other corporation;

(b) both of the corporations are controlled by the same person or group of related persons each member of which is related to every other member of the group;

(c) each of the corporations is controlled by one person and the person who controls one of the corporations and the person who controls the other corporation are related persons;

(d) one of the corporations is controlled by one person and that person is related to any member of a group of related persons that controls the other corporation;

(e) one of the corporations is controlled by one person and that person is related to each member of an unrelated group that controls the other corporation;

(f) any member of a group of related persons that controls one of the corporations is related to each member of an unrelated group that controls the other corporation; or

(g) each member of an unrelated group that controls one of the corporations is a related person to at least one member of an unrelated group that controls the other corporation. O. Reg. 516/06, s. 25 (3).

Findings related to capital expenditures 26. (1) The rules set out in this section apply to the Board in making findings relating to capital expenditures. O. Reg. 516/06, s. 26 (1).

(2) A rent increase shall not be ordered in respect of a capital expenditure unless the work was completed during the 18-month period ending 90 days before the effective date of the first intended rent increase referred to in the application. O. Reg. 516/06, s. 26 (2).

(3) The value of the landlord’s own labour in carrying out the work involved in the capital expenditure is equal to the amount of time spent multiplied by a rate of pay that is reasonable given the landlord’s experience and skill in the type of work done but,

(a) if the amount of time spent exceeds the amount of time that would be reasonable given the landlord’s experience and skill, the latter amount of time shall be used in the calculation of the value of the landlord’s own labour;

(b) only that part of the value of the landlord’s own labour that does not exceed the amount a person in the business of doing such work would charge shall be considered; and

(c) the value of the landlord’s own labour does not include any amount with respect to the management and administration of the work involved in the capital expenditure. O. Reg. 516/06, s. 26 (3).

(4) The cost of a leased asset is the fair market value of the leased asset at the commencement of the lease. O. Reg. 516/06, s. 26 (4).

(5) The amount of a capital expenditure is calculated as follows:

1. Add the following amounts:

i. The purchase prices.

ii. The cost of any leased assets.

iii. The installation, renovation and construction costs.

iv. The value of the landlord’s own labour as determined under subsection (3).

2. Subtract from the amount determined under paragraph 1 any grant or other assistance from any level of government and any insurance, salvage, resale or trade-in proceeds related to the work undertaken or the item purchased. O. Reg. 516/06, s. 26 (5).

(6) For each rental unit that is subject to the application, the percentage rent increase that is justified by capital expenditures shall be determined in accordance with the following rules.

1. Determine which capital expenditures affect the unit.

2. For each capital expenditure that affects the unit, multiply the amount of the capital expenditure determined under subsection (5) by the rent for the unit, and divide that result by the sum of the rents for all rental units in the residential complex that are affected by the capital expenditure.

3. If the Board is of the opinion that the amount determined under paragraph 2 for a capital expenditure does not reasonably reflect how the unit is affected by the capital expenditure,

i. paragraph 2 does not apply, and

ii. the Board shall determine an amount by another method that, in the opinion of the Board, better reflects how the unit is affected by the capital expenditure.

4. Add the amounts determined under paragraph 2 or 3, as the case may be, for all of the capital expenditures that affect the unit.

5. Amortize the amount determined under paragraph 4 over the weighted useful life of the capital expenditures that affect the unit, as determined in paragraph 6, in equal monthly instalments of blended principal and interest.

6. The weighted useful life of all capital expenditures that affect the unit shall be determined in accordance with the following rules:

i. For each capital expenditure that affects the unit,

A. divide the amount determined under paragraph 2 or 3, as the case may be, for the capital expenditure by the amount determined under paragraph 4, and

B. multiply the amount determined under sub-subparagraph A by the useful life of the capital expenditure, as determined under section 27.

ii. Add the results determined under sub-subparagraph i B for all capital expenditures that affect the unit and round to the nearest full year.

7. The amortization under paragraph 5 shall be calculated using the interest rate determined under section 20.

8. The percentage rent increase that is justified for the unit by capital expenditures is determined by dividing the amortized amount determined under paragraph 5 by the monthly rent for the unit, and multiplying the result by 100. O. Reg. 516/06, s. 26 (6).

Useful life of work or thing 27. (1) The useful life of work done or a thing purchased shall be determined from the Schedule subject to the following rules:

1. Where the useful life set out in Column 3 of the Tables in the Schedule is less than 10 years, the useful life of work done or a thing purchased shall be deemed to be 10 years.

2. If, when a thing is purchased, it has previously been used, the useful life of the thing shall be determined taking into account the length of time of that previous use.

3. If the work done or thing purchased does not appear in the Schedule, the useful life of the work or thing shall be determined with reference to items with similar characteristics that do appear in the Schedule.

4. Despite paragraphs 2 and 3, for the purposes of making a finding under this section, the useful life of work done or a thing purchased shall not be determined to be less than 10 years. O. Reg. 516/06, s. 27 (1); O. Reg. 342/17, s. 1.

(2) If the useful life of work done or a thing purchased cannot be determined under subsection (1) because the work or thing does not appear in the Schedule and no item with similar characteristics appears in the Schedule, the useful life of the work or thing shall be what is generally accepted as the useful life of such work or thing but in no case shall the useful life be determined to be less than 10 years. O. Reg. 516/06, s. 27 (2).

Homestead Land Holdings Limited v Abdelmalak, 2020 CanLII 117955 (ON LTB)

16. The Landlord's evidence must establish all of the following with respect to each of the capital expenditures:

• The work done meets the definition of "capital expenditure" set out in s. 18(1) of the regulation;
• The capital expenditure is "eligible" pursuant to s. 126 of the Act;
• The work was completed during an 18-month window calculated in accordance with s. 26(2) of the regulation;
• The work has been fully paid for or "incurred" pursuant to s. 18(1) of the regulation; and
• The useful life of the capital expenditure must be identified for each expenditure pursuant to s. 27 of the regulation.